A push expected from domestic consumption

According to the Domestic Markets Department under the Ministry of Industry and Trade (MoIT), the purchasing power of the domestic market over the past seven months has recovered quite strongly, which is a positive highlight in the context of many other sectors facing difficulties.

Many distribution channels have launched promotional programs to stimulate consumer demand

Despite stable and relatively high growth, if calculated at current prices, the total retail sales of consumer goods and services in the first seven months of 2023 reached a higher scale but the growth rate was lower than the same period last year. Overall, although the purchasing power has recovered, the demand is still weak, not reaching the level before the COVID-19 pandemic, and not stimulating production, investment, and consumption.

In the current context when government spending and total public investment are no longer maintained at a high level and export growth slows down with increased inventories, and shortage of orders, etc., prioritizing domestic consumption demand stimulation is considered an important solution to promote economic growth in the last months of the year.

According to economic expert Vu Vinh Phu, the reduction of VAT is a good “medicine” to stimulate spending, contributing to GDP growth since VAT reduction is helping to reduce direct costs for shoppers. Therefore, the reduction of VAT will stimulate consumers to shop more, and production and business enterprises will have better capital turnover. The two-percent reduction in VAT on raw materials, spare parts, and equipment, etc. also helps reduce production input costs and businesses have room to reduce product prices and share difficulties with consumers. It can be affirmed that this policy also helps businesses recover production and business operation.

However, the above “dose” is still not enough, and the State and businesses need to adopt many solutions to increase the purchasing power for the market and stimulate domestic aggregate demand.

This year, in the context of low market purchasing power, the People’s Committee of Ho Chi Minh City has approved the organization of a promotion program titled “Shopping Season” from June 15 to September 15, which is expected to create a push to stimulate shopping with many attractive promotional activities.

In order to stimulate shopping in the upcoming back-to-school season, hundreds of supermarkets, hypermarkets, and convenience stores of Ho Chi Minh City Union of Trading Cooperatives (Saigon Co.op), including Co.opmart, Co.opXtra, will also offer discounts from 20 percent to 30 percent for school supplies, clothes, school bags, etc.

Meanwhile, in low consumption months like May, July and November, Hanoi will organize separate promotional programs to stimulate the market. Tran Thi Phuong Lan, Acting Director of the Hanoi Department of Industry and Trade, said now the department has received 21,000 registrations for promotional programs from 4,000 businesses.

With the participation of localities and enterprises, the total retail sales of consumer goods and services are expected to maintain stronger growth in the coming time.